COALITION partners DIKO and AKEL held a meeting yesterday with President Christofias and the Finance Minister to discuss the state of the economy, agreeing to continue the talks.
“It was a very good discussion, very productive, conducted in a constructive climate,” government spokesman Stefanos Stefanou told newsmen later.
He said discussions revolved around two ‘pillars’: first, the immediate measures that must be taken to raise revenues, and second a three-year plan to curb state expenditures.
Yesterday’s meeting involved the sides sounding each other out. No written proposals were submitted. Economy experts from DIKO and AKEL are to hold more in-depth talks with the Finance Minister and his team over the course of the week.
“Our aim is to complete these discussions as soon as possible,” Stefanou said.
Asked whether the President would at some point consult with the leaderships of opposition parties, the spokesman said: “Let us focus on what we are doing now, and later on we’ll see about that.”
Under the 2011 budget, total expenditure is set to increase by 1.1 per cent – the lowest percentage in the past 30 years, as the government has put it – but still leaving a €150m deficit.
Measures are needed to meet budget deficit limits set by the European Union. Steps being considered to raise revenues and plug the shortfall include an increase in corporate tax only affecting Cypriot companies, some form of taxation on banks, a new tax-calculation system for large landowners and tax hikes on tobacco and alcohol.
The projected public deficit, without any measures to reduce it, will stand at 5.4 per cent, according to the budget. The cash-strapped government is now seeking a consensus – at least among the two coalition parties – for steps ensuring the deficit does not exceed 4.5 per cent.
Speaking to reporters, AKEL leader Andros Kyprianou said discussion of the measures should wrap up by the end of the week or beginning of the next, at the latest. But agreement on a blueprint to control public expenditure would take longer, he said.
“There is, I feel, a genuine will to reach commonly-acceptable proposals,” he commented.
For his part, DIKO chairman Marios Garoyian said the three-way talks are designed to reach a “common denominator”. Their aim, he added, was not only to find a short-term fix for the budget shortfall but also to come up with solutions tackling the economy’s structural problems.
Senior DIKO cadres have said their party will not endorse the 2011 budget as is, and want the increase in expenditures – however small – to be stricken off before the budget comes up for parliamentary approval in December.
